Lecture 8

Question 1

Brand options

Answer 1

1. National Brand / Manufacturer’s Brand
2. Store brands / Private-label brands / House brand / Own brand
3. Generic Brand

Question 2

National Brands / Manufacturer’s Brand

Answer 2

• Products are designed, manufactured by a vendor and sold to many different retailers.
• Vendors responsible for developing, producing with consistent quality and having marketing campaigns to establish brand image.

Question 3

Store brands / Private-label brand / house brand / owned Brand

Answer 3

• Products developed by retailers
• They develop design and contact manufacturers to produce these products.
  Pros:
  Build customer loyalty through unique merchandise
  Difficult for customers to compare price with competitors
  Improve margins - 5% to 10% or higher
  Gives store distinct image

Question 4

Generic Brands

Answer 4

Labelled with name of commodity, no brand name to distinguish.

Targets price-sensitive segment by offering no-frills product at discounted price

Question 5

How do retailers choose between store brand / national brands

Answer 5

1. Store brand can enhance and expand assortments
   and is of better value
2. Profitability
   (National brands are a double edged sword)
   - Customers that developed loyalty to national brands will want the brand in retailer’s store, otherwise customers might view its assortments as lower in quality, reducing in profits.
   - Since there is consistency in national brands it is easy to compare between retailers for better prices.
3. Flexibility
   A strong national brand can dictate how retailers display and advertise.

Question 6

Costs associated with global sourcing decisions

Answer 6

1. Country of Origin effects
2. Foreign currency fluctuations
3. Tariffs
4. Costs in changing inventory
5. Transportation costs
6. Lead time

Question 7

Legal, ethical and socially responsible issues for buying merchandise.

Answer 7

1. Counterfiet
2. Commercial bribery
3. Exclusive dealing agreements
4. Tying contracts
5. Supplier practices